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Student debt written off to rise --shock horror.
grizzly1911
Posts: 9,965 Forumite
The government is not doing enough to get student loans repaid as the total value of money owed continues to rise, a spending watchdog has warned....
It says officials are overestimating how much money will be recovered each year,......
This is against a rapidly rising number of UK students who are taking out student loans, with the NAO reporting that the number of borrowers will more than double to 6.5 million people over the next three decades.
The report warns that the government has previously been over-optimistic in how much is likely to be repaid by students.
The expected level of debt to be written off had been set at 28% in 2010, which had risen to 35% by 2013.
Labour's university spokesman, Liam Byrne, said figures from the House of Commons library showed this had risen to more than 40%, which would cost a further £600m.........
"We may be at the point where so many students loans are being written off, that the government's new student finance system is actually more expensive than the old arrangements, even though the government is asking students for three times as much money," said Mr Byrne.....
http://www.bbc.co.uk/news/education-25121145
Why is this such a surprise?
On a previous thread it was suggested by someone linked to SLs that 70+% was expected to be written off?
The part sell off of the existing loan book was at a substantial discount.
Why aren't all graduates "taxed" on their loans albeit at a lower figure than 9% at lower earnings?
Why do wee need so many people going to University and racking up the debts in the first place if there are insufficient jobs and careers available to allow the loans to be repaid.
Why have a system of loans in the first place and not simply have graduated graduate taxes based on top of the existing income tax structure? The bureaucracy of the student loan system could then be streamlined.
When will they start attaching the debt to future assets as and when acquired to elicit repayment at a future point?
It says officials are overestimating how much money will be recovered each year,......
This is against a rapidly rising number of UK students who are taking out student loans, with the NAO reporting that the number of borrowers will more than double to 6.5 million people over the next three decades.
The report warns that the government has previously been over-optimistic in how much is likely to be repaid by students.
The expected level of debt to be written off had been set at 28% in 2010, which had risen to 35% by 2013.
Labour's university spokesman, Liam Byrne, said figures from the House of Commons library showed this had risen to more than 40%, which would cost a further £600m.........
"We may be at the point where so many students loans are being written off, that the government's new student finance system is actually more expensive than the old arrangements, even though the government is asking students for three times as much money," said Mr Byrne.....
http://www.bbc.co.uk/news/education-25121145
Why is this such a surprise?
On a previous thread it was suggested by someone linked to SLs that 70+% was expected to be written off?
The part sell off of the existing loan book was at a substantial discount.
Why aren't all graduates "taxed" on their loans albeit at a lower figure than 9% at lower earnings?
Why do wee need so many people going to University and racking up the debts in the first place if there are insufficient jobs and careers available to allow the loans to be repaid.
Why have a system of loans in the first place and not simply have graduated graduate taxes based on top of the existing income tax structure? The bureaucracy of the student loan system could then be streamlined.
When will they start attaching the debt to future assets as and when acquired to elicit repayment at a future point?
"If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham
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Comments
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Wasn't this a feature of the student lending system? You don't repay until your income is above £x so there will always be a proportion that don't repay.
As incomes have been rising slowly and youth unemployment has been high, that feature of the scheme will figure more strongly. My guess is that they'll 'kitchen sink' the losses and when income and employment start rising strongly towards the back end of next year will be able to announce a profit.
It worked with the Northern Rock Bad Bank after all.0 -
grizzly1911 wrote: »
Why.....
Why .....
Why ......
I suspect the answers, in truth, are painfully simple and painfully predictable.
Probably the muppets who administer these things didn't have the common sense to link and validate each loan to NI number or similar.
By the simple act of doing this, I simply don't see how loans wouldn't get picked up as standard......
I shall write a stiff one to my MP asking her to write to the DofE telling then the good news that computers have been invented.....0 -
Loughton_Monkey wrote: »I suspect the answers, in truth, are painfully simple and painfully predictable.
Probably the muppets who administer these things didn't have the common sense to link and validate each loan to NI number or similar.
By the simple act of doing this, I simply don't see how loans wouldn't get picked up as standard......
I shall write a stiff one to my MP asking her to write to the DofE telling then the good news that computers have been invented.....
Just because the NI number is linked doesn't guarantee repayment if they don't, can't, won't, don't need to, earn sufficient income.
The prime linkage on a Student Loan Application is NI number for UK applications - it certainly was on the ones I saw completed and supported.
Something tells me the politicians may have created their own problem. Blue on blue (not referring to the colour of the ties)."If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0 -
The 1999-2010 loans will get sold as soon as it is politically acceptable to do so. Most domestic loans will get paid when they go into private hands. This may well be at a significant loss to the taxpayer.
Something does tell me that in order to mitigate any possible loss, the interest cap, the cancellation at 65 and the 9% of post 15k earnings will be dropped. This will give the buyer carte blanche to do as they wish with the loans.
Oddly, as the mortgage-style student loans were sold under both Labour and the coalition, it seems certain that whoever is in number 10, the outcome will remain the same here.
They are stuffed as far as collecting from abroad though. Probably too costly to pursue.0 -
grizzly1911 wrote: »Just because the NI number is linked doesn't guarantee repayment if they don't, can't, won't, don't need to, earn sufficient income.
In which case surely it doesn't matter?grizzly1911 wrote: »The prime linkage on a Student Loan Application is NI number for UK applications - it certainly was on the ones I saw completed and supported.
OK. If that's true, then my assumption is untrue. In which case HMRC - who do use your NI Number as your key reference - can surely track you down if you are earning enough to start repayments....0 -
I am not sure whether the collection rate will improve under private hands or not. The primary link to repayment is through earnings declared and accepted via HMRC. If the money isn't "earned" it can't be collected.yorkshirekev wrote: »The 1999-2010 loans will get sold as soon as it is politically acceptable to do so. Most domestic loans will get paid when they go into private hands. This may well be at a significant loss to the taxpayer.
Something does tell me that in order to mitigate any possible loss, the interest cap, the cancellation at 65 and the 9% of post 15k earnings will be dropped. This will give the buyer carte blanche to do as they wish with the loans.
Oddly, as the mortgage-style student loans were sold under both Labour and the coalition, it seems certain that whoever is in number 10, the outcome will remain the same here.
They are stuffed as far as collecting from abroad though. Probably too costly to pursue.
Whilst there will be a capital loss to the treasury, in selling off the loans, it will be offset to a large extent in the extended collection costs that will not be needed.
Providing the loans are repaid as required, at whatever rate, how can the new holder of the loan book change the terms as you suggest?
I can see the terms of the new loans being changed to try and ensure a better return. Mindless bureaucracy and inconsequential accounting IMO.
The financing is a symptom not the cause."If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0 -
Loughton_Monkey wrote: »In which case surely it doesn't matter?
Why set up a system that is destined to fail in the first place?
If they do why feign concern and surprise when it does?"If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0 -
The repayment rate for pre 1998 "mortgage style " loans is 69%.0
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The repayment rate for pre 1998 "mortgage style " loans is 69%.
Is that 69% are being paid off to some degree or actually the capital recovered?
If I am paying back £10 per month it doesn't really make that much difference."If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0 -
grizzly1911 wrote: »I am not sure whether the collection rate will improve under private hands or not. The primary link to repayment is through earnings declared and accepted via HMRC. If the money isn't "earned" it can't be collected.
Whilst there will be a capital loss to the treasury, in selling off the loans, it will be offset to a large extent in the extended collection costs that will not be needed.
Providing the loans are repaid as required, at whatever rate, how can the new holder of the loan book change the terms as you suggest?
I can see the terms of the new loans being changed to try and ensure a better return. Mindless bureaucracy and inconsequential accounting IMO.
The financing is a symptom not the cause.
There is small print in the loans saying that the terms can be changed. Therefore, the government could put in legislation to do just that before they sell them.
There will be many people who get rather a painful bump after the next election.0
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